The Rapid Rise of Chinese Dairy

CHINA - The most recent annual Rabobank dairy industry survey published earlier this week paints an interesting picture of a dynamic Chinese Dairy industry, reports Nick McIlroy, Shanghai Office, Bord Bia – Irish Food Board.
calendar icon 31 July 2012
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From an industry which has undergone wholesale transformation and been shaped in recent years by food scares, rapidly increasing domestic dairy consumption and government-led rationalisation, the two most upwardly mobile companies in this year’s global top 20 are both Chinese: Yili up four places to 15, and Mengniu up two to 16.

An earlier Rabobank report highlighted the growth of Dairy in emerging markets such as China and Southeast Asia as offering the strongest opportunities within the industry. Fifteen of the top 20 have investments in China alone, with Nestle establishing a dairy farming institute and Arla buying up a six per cent stake in Mengniu in June 2012 alone, cementing their foothold in the growing market.

With both Mengniu and Yili Dairies having turnover in excess of €4bn each in 2011, setbacks such as Yili’s latest product recall of mercury-tainted infant formula in June are further driving integration and consolidation in the sector as they aim to secure milk supplies from their own farms to increase quality control along the supply chain, and hopefully, to regain market share lost to foreign imports.

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